Overview of Solana's crypto-economic incentive design
Solana employs a crypto-economic system to incentivize validation clients to maintain network security and decentralization. The system relies on two primary remittance channels:
- Protocol-based (Inflationary) Rewards: These are issued based on a global, protocol-defined inflation rate and a pre-determined disinflationary schedule. Rewards are distributed across actively staked tokens on the network per epoch, providing monetary supply predictability.
- Transaction Fees: Market-based transfers paid by users for the inclusion and execution of transactions. A portion of these fees is partially burned to provide long-term economic stability and protection against forking.
Additionally, the network implements Storage Rent Economics to manage the externality costs associated with maintaining the active state of the ledger.